Taiwan shares close above 10,800 points

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Taipei, Shares in Taiwan ended above the 10,800-point mark in expanded turnover as large cap stocks in both the electronics and non-high-tech sectors moved higher after markets in the United States posted gains overnight, dealers said.

The buying reflected reduced worries over a fund flight from Taiwan as a report of lower inflation in the U.S. led investors to believe the U.S. Federal Reserve will raise interest rates less aggressively than expected, making the U.S. dollar and U.S. dollar assets less attractive, they said.

The weighted index on the Taiwan Stock Exchange, the Taiex, closed up 98.77 points, or 0.92 percent, at 10,858.98, after fluctuating between 10,808.40 and 10,874.63, on turnover of NT$163.24 billion (US$5.49 billion).

The market opened up 0.45 percent to breach 10,800 after the Dow Jones Industrial Average closed up 0.80 percent and the S&P 500 index ended up 0.94 percent overnight on a report that inflation in the U.S. rose only 0.2 percent in April, dealers said.

Momentum continued with buying focusing on electronics heavyweights, in particular in the Apple supply chain, after shares of the U.S. consumer electronics giants hit a new high overnight, they said.

Buying also spread to non-high-tech stocks to push up the Taiex up further by the end of the session, they added.

"The U.S. CPI data brought relief to many investors at home and abroad as it led them to think the Fed will not speed up the pace at which it raises interest rates," KGI Securities analyst Phil Chu said.

"A slower pace in rate hikes by the Fed is expected to limit the U.S. dollar's upturn and stem the exodus of funds from the region, easing fears over foreign institutional selling in the local stock market," Chu said.

According to the TWSE, foreign institutional investors bought a net NT$8.86 billion in shares on the market Friday after a net buy of NT$2.73 billion on Thursday.

"Today's buying focused on large cap stocks," Chu said. "Major suppliers to Apple Inc. served as an anchor after Apple shares rose 1.43 percent overnight to a new high," Chu said.

The supplier of the A11 processor for the latest iPhone, Taiwan Semiconductor Manufacturing Co. (TSMC), gained 1.53 percent to close at NT$233.00, with 30.66 million shares changing hands.

iPhone assembler Hon Hai Precision Industry Co. rose 2.53 percent to end at NT$85.00 after it reported better than expected sales for April.

"Look at the expanded turnover, many investors here appeared willing to chase prices," Chu said. "So the old economy and financial sectors also benefited from the strong buying,"

Among the old economy heavyweights, Formosa Chemicals & Fibre Corp. rose 3.62 percent to close at NT$114.50, Formosa Plastics Corp. added 2.36 percent to end at NT$108.50, and Formosa Petrochemical Corp. gained 2.03 percent to close at NT$125.50.

In the financial sector, Cathay Financial Holding Co. rose 2.44 percent to end at NT$54.60, and CTBC Financial Holding Co. added 2.33 percent to end at NT$21.95.

"After today's gains, the local main board has become technically healthier but the nearest technical resistance will lie ahead of 10,900 points," Chu said, implying possible technical corrections soon before another takeoff.

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